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Altice USA CEO: Launch of mobile service 'imminent'

Altice USA Inc. CEO Dexter Goei said on the company's July 31 earnings call that the impending launch of the company's mobile service is "now imminent with multiple network and handset partnerships in place."

Goei's comments are consistent with previous commentary he has made around timing for a summer launch of the mobile service. The service will rely in part on a full mobile virtual network operator agreement with Sprint Corp., under which Altice has access to Sprint's network capacity and Sprint has access to Altice's wired network infrastructure, including its fiber footprint.

Goei also said that Altice's mobile partnership with Sprint will be expanded to the new T-Mobile US Inc. network and that it will include 5G services. The U.S. Department of Justice on July 26 conditionally approved T-Mobile's pending merger with Sprint on the condition that the combined entity divests multiple wireless assets. The settlement agreement, which must be approved in court, paves the way for broad federal approval of the wireless combination.

Goei added that Altice expects its agreement with Sprint to get extended for the life of the Justice Department's consent decree with T-Mobile and Sprint, which would be seven years from the date of the deal closing. Thus, he said the consent decree can be seen as essentially a four-year extension of Altice's existing agreement with Sprint.

Also during the call, Goei gave an update on the possible sale of the company's Lightpath fiber business, saying Altice continues to review "strategic alternatives" and that its process is ongoing.

Goei called a potential Lightpath transaction "an opportunistic situation," but noted a sale is not a "must-do," given that Altice likes the current trajectory of the business.

New York-based private equity firm Stonepeak Partners LP was nearing a deal to acquire a minority stake in Lightpath in a transaction that would value the fiber business at about $3 billion, Bloomberg News reported July 24. According to the report, Altice USA would retain a majority stake in Lightpath under such a transaction.

For the quarter, Altice USA reported revenue of $2.45 billion, up 3.7% year over year, driven by increases in residential, business services and advertising revenue.

The net income attributable to Altice USA shareholders grew to $86.4 million, or 13 cents per share, in the second quarter, as compared to a net loss of $97.9 million, or 13 cents per share, in the year-ago period.

The S&P Global Market Intelligence consensus EPS estimate for the period was 15 cents on a normalized basis and 14 cents on a GAAP basis.

In terms of customers, Altice USA recorded a net loss of 21,000 video customers, as compared to a loss of 24,000 in the year-ago period. Altice USA also added 13,000 net broadband customers versus net additions of 10,000 in the second quarter of 2018.

Despite a trend of de-emphasizing video customers across many major cable companies, Goei said video remains a "profitable product" and a "very core product." Goei added that Altice's perspective on video may be different than competitors because it has a unique footprint in the New York area, which is a very high video bundle consumption market.

The company adjusted its full-year guidance, projecting 3.0% to 3.5% year-over-year revenue growth in 2019, up from prior guidance of 2.5% to 3.0%.

Altice also announced a new three-year, $5 billion share buyback program. Altice repurchased $600 million of its shares during the second quarter. The company is targeting $1.5 billion in share repurchases for the full year, of which it completed $1.2 billion in the first half of 2019.